JPMorgan & Craigs tapped by NZ government for Kiwibank deal

Kiwibank is in search of $NZ500m ahead of plans for a share market listing that could attract Australian investors.

Investment bank JPMorgan and its New Zealand affiliate Craigs are understood to have won the role advising the New Zealand government’s treasury on a deal involving the state owned Kiwibank.

While JPMorgan and Craigs are advising the government, investment bank Macquarie Capital is understood to have won the mandate to find a backer for the New Zealand ­government-owned lender, as earlier flagged by DataRoom on March 9.

I’s the second big mandate JPMorgan has landed across the Tasman in the past year with Craigs, as the pair also line up among the advisers for a possible sale or float of at least $2bn worth of dairy assets owned by Fonterra.

The plan for Kiwibank is to find a party able to inject $NZ500m ($454m) into the business, and sources believe New Zealand-based superannuation funds could be logical investors.

It comes ahead of a possible initial public offering of the government-backed lender in the ­medium term.

New Zealand ­Finance Minister Nicola Willis announced the initiative in December.

She said the change would ­enable the New Zealand-owned banks to more vigorously compete against the big four Australian banks.

Kiwibank was started in 2001 by the Labour government to compete with top Australian lenders.

Treasury had been directed to talk to New Zealand KiwiSaver funds, New Zealand investment institutions and New Zealand professional investor groups about a potential investment of up to $NZ500m in the bank.

Ms Willis said Kiwibank would not be ready for a float until its current digital transformation is completed, expected in 2028.

It meant that no decision on an IPO would be made in this government term.

Because the government understood that before making any investment, institutional investors would require a clear option to sell shares.

If an IPO was not approved at a later date, this could take the form of having an option for investors to sell their shares back to the crown at an independently assessed fair value.

Ms Willis has said the government wanted the Reserve Bank of New Zealand to place greater emphasis on banking competition across a range of its policies and actions.

This was in the form of a revised financial policy remit and a detailed set of expectations to the Reserve Bank, and included a review of minimum capital thresholds for new entrants into the banking sector.